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Ex-Abbey chief tables Rock plan as HSBC suffers
Nick Goodway, Evening Standard12 Nov 2007
Former Abbey chief executive Luqman Arnold today launched a plan to rescue Northern Rock as shares in rival UK banks remained under pressure on fears that they are set to announce huge credit crunch writedowns.
HSBC today became the latest target of speculation after analysts at Lehman Brothers said it could have to boost its reserves against subprime loans in the US by as much as $2.4 billion (£1.15 billion). Its US business HSBC Finance is due to report third-quarter numbers on Wednesday.
HSBC shares, which fell 1.4% on Friday, were down another ½p at 840p today. Royal Bank of Scotland and Barclays which shed 3% and 2.4% respectively on Friday, stabilised today, with RBS up 12p at 414¾p and Barclays 13½p better at 488p.
Barclays was forced to deny rumours about its potential writedowns and the future of its chief executive John Varley and President Bob Diamond after its shares were briefly suspended in hectic trading on Friday.
Barclays has sought to reassure investors by saying its trading update in a fortnight's time is likely to include far more detailed financial information than usual.
It would not confirm that it is working with auditor PricewaterhouseCoopers to give a fully-updated balance sheet for Barclays Capital, which is where any subprime-related writedowns are likely to appear. However, a source close to the bank said it was "aware of what the markets are interested in and we have always been at the transparent end of the spectrum".
Northern Rock needs to be dealt with quickly before its liabilities become any greater, sources close to Arnold's investment group Olivant said today. It said it had the backing of "a dozen blue-chip" UK institutional investors and wealthy families.
Arnold wants to parachute in a team of seven professionals led by himself to stabilise the former building society which he does not believe can survive the three months or more it would take for a full-scale takeover to go through.
Olivant would subscribe for new shares in Northern Rock up to a 20% stake. It told the Stock Exchange it does not plan to bid for the whole company.
Northern Rock shares today rose 2.1p to 147.1p
